You can apply similar logic in figuring out expenditures. Use your pro forma statement to see what expenditures you expect, then break them into one of two groups: cash expenditures and term expenditures. If you expect to cut a check for the purchase at the time you buy it, that would be a cash expenditure. If, however, you decide to take advantage of terms offered by your vendors and buy goods on credit, put these in the term expenditures line.
What you do next is up to you, but it is best to be committed to maintaining good credit with all of your suppliers, which means you should pay all expenditures in the next month, when they are due (assuming you get “net 30” terms from your suppliers).
The key line in a cash flow projection worksheet is “Net Cash Flow.” If the number in this line is positive, it means you have enough money coming in during that particular month to cover your expenses. If the number is negative, you do not have enough money and you will need to resort to cash that you have retained from more lucrative months.
Finding yourself short on a given month is a hassle. It will cost you in money and reputation because you may not have enough cash to pay your creditors on time. It may cost you again in the same fashion as you cut checks with little room for error, struggling hard to stay on top of things. Sooner or later you will make an error and those checks will start bouncing back to you. However, by using the valuable information in your cash flow projection worksheet, you can plan how you will spend the money that comes in from your business so that you do not find yourself short.
4
Choosing The Right Equipment For The Job
You are a landscaping professional, so it is important that you select equipment made for professionals. First of all, you want to look the part of a lawn care expert. Would an expert show up at a jobsite with a tiny, 0.5 horsepower, electric weed whacker? No. Leave that for the kid next door, who will cut your lawn for five bucks. To separate yourself from that kid-next-door image, you must purchase professional equipment.
Second, you’re going to be giving your equipment a thorough workout day after day, which means you need commercial-quality equipment. The equipment made for the average homeowner will simply not stand up to this use and in the long run will end up costing you more money, more frustration, and more downtime.
You may not need all the equipment listed in this chapter for your own business; what you need will depend on what services you are planning to offer. As well, you may not have the cash to buy everything you want right away. However, I wanted to provide information on all the essentials, as well as advice on which items can wait until you have cash coming in regularly.
You will notice that I recommend specific brand names for many of the tools of the trade. Generally these are the biggest manufacturers of each of the major pieces of equipment. That is not to say there are no other reputable companies from which you can buy, but the names supplied will help you get started. Check out the companies’ websites to see what they offer. Then, when you visit your local dealer, you will have an idea of what you need and what you are talking about.
Choosing a Dealer
Become familiar with your local equipment dealers. If possible, talk to other landscapers and see where they shop. As you investigate equipment suppliers, ask yourself the following questions:
• What lines of equipment manufacturers do they carry? Do they specialize in one line of equipment or do they offer you a choice?
• What type of clientele do they have? Do they deal strictly with commercial companies or are they also a retail outlet? They will probably be more helpful to you if they specialize in commercial equipment.
• Do they service equipment as well as sell it? Do they have loaner equipment that you can use if yours is in the shop? (This may not necessarily be a free service, but it is a useful one.)
• If a shop has a service department, talk to the mechanics. Are they experienced? A good mechanic will know the equipment inside and out and will be able to tell you technical pros and cons of different models, what types tend to be higher maintenance than others, and what breaks down the most. Your mechanic can be an excellent source of time- and money-saving advice, so put a high priority on choosing a good one.
• Was the staff helpful in advising you on what equipment to buy? Do they offer demo models so that you can test an item before committing to the purchase?
1. Your Vehicle
The ideal vehicle for a landscaping business is a pickup truck, although some people do manage with a station wagon or minivan. If you have no other way to start out, then, of course, make do with what you have, but you will find that a pickup makes your business run more smoothly.
Pickups are sized according to how much weight they are designed to carry. For example, a half-ton truck can carry half a ton of soil (or other load), while a three-quarter-ton truck, often called a full-sized pickup, is a more heavy-duty option. One-ton trucks, even larger, are generally six-wheeled, flatbed vehicles.
The size you choose will depend on what services you plan to offer. If you will be delivering soil or other materials, if you are going to tow a trailer, or if you plan on having a large crew (four or more people), then you should consider purchasing a full-sized three-quarter-ton pickup. An alternative, if you already have a half-ton truck, is to install a reinforced suspension, which is not as difficult or expensive as you might think.
Don’t feel you need to spend the money on a brand-new truck. Most of all you want a vehicle you can count on and that suits your particular needs. Do some research and make your purchase as you would for any other vehicle.
2. Trailer Options
I was in business for five years before I bought a trailer. Once I did, I wondered how I ever managed without one.
While there are a multitude of different trailers you can choose from, there are two basic types that you should consider: fully enclosed and open.
2.1 Fully enclosed trailer
A fully enclosed trailer has four sides and a roof. If it is nicely painted with your business name and logo, it presents a classier and more professional look than an open trailer. It also has several practical advantages:
• You can keep your day-to-day equipment in the trailer and lock it up each night, saving you the trouble of loading and unloading everything each day.
• You can keep your equipment secure on the jobsite by locking the trailer.
• You can protect your gear from the environment. For example, you can keep weather-sensitive supplies, such as fertilizer and lime, in the trailer and not worry that they will be rained on.
• The trailer can provide a bit of shelter for you, too. For example, if it is rainy or windy you can step inside the trailer to fill your fertilizer spreader or your chemical applicator.
If you’re in the market for a fully enclosed trailer, be sure to check out the following options. They should be available at purchase or can be installed professionally once you’ve got your trailer.
• Floor tie-downs. You will need a few tie-downs to help secure your equipment while you are moving.
• Wall tie-downs. These may be as simple as perforated metal strips (similar to shelving tracks) running along the length of both sides of the trailer. Ideally there will be two or three parallel tie-downs to provide plenty of anchor points for securing all of your equipment. Alternatively, you can install special